So the wires are aflame with the news that Microsoft and Yahoo have “joined forces” in a 10-year search and advertising deal.

Search and destroy

Let’s be clear on this one: Microsoft isn’t partnering with Yahoo. It’s devouring it. It’s gobbling it up whole like a party snack before moving onto its next conquest. The argument, of course, is that not having to fund search will save Yahoo “hundreds of millions of dollars.”

Well done. If Nike halted the production of shoes it would save itself hundreds of millions of dollars too. The only drawback being they’d have bugger-all to sell. All of which begs the question: is Yahoo nothing more than a brand?

why-yahoo-question-mark

Yahoo is a husk

Is it an ironic coincidence that “the term “Yahoo” has become synonymous with “cretin,” “dinosaur,” and/or “Neanderthal?”
It seems their misappropriation of Swift’s literary savages has finally come to define them. They’re out of touch; a member of a collective of prehistoric companies that include the likes of AOL, whose search has stalled but just about manages to scrape a revenue through the hillbillies, the half-dead and the Luddites who still use dial-up.

Wrong deal, wrong time

Yahoo chief Carol Bartz said: “This agreement comes with boatloads of value for Yahoo, our users, and the industry. And I believe it establishes the foundation for a new era of internet innovation and development.”

Note the “boatloads of value,” in pointed contradiction to the “boatloads of money” Bartz previously promised to shareholders. Seems that promise was a boatload of (*cough*) bravado. Yahoo’s stock mirrors this disappointment, with share price taking a 7% drop immediately after the announcement. The deal is certainly a far cry from the $44.6bn bid Microsoft made for Yahoo in February 2008.

Microsoft should be pretty pleased

Bing was always a way for Microsoft to acquire Yahoo. But it wasn’t a cheap ploy; they’ve come up with a decent search engine that even breaks some new ground.  It embraces real-time search by incorporating Twitter results and it bundles in other nice touches like video previews straight from the results page. They’ve even chosen the name carefully, making sure it can be used as a verb – “I binged it.” It does, in fact, make Google look a little bit lazy – and out of touch. As well as Wave and Chrome, which mean nothing yet to the consumer, Google’s most recent activity includes, err, adding the pointless ability for users to personalise their search results and … oh yeah, taking Gmail out of beta after five years. Let’s face it – that’s a bit lame, Google. Next you’ll be taking lessons off Ask Jeeves.
Yahoo! is dead. Long live Microsoft.

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Microsoft took their time, but the web is abuzz with news that Office is going to be available as a fully web-based service.  According to ReadWriteWeb:

These will be “lightweight versions”, but Microsoft told us yesterday that they’ll still have rich functionality and will be comparable to Google’s suite of online office applications. The apps will enable users to create, edit and collaborate on Microsoft Office documents through the browser. The apps will work in IE, Firefox and Safari browsers (no word on whether Google Chrome will be supported).  Microsoft clarified in an email that these apps will use HTML and AJAX, but also Silverlight components.

The next release of Microsoft Office will include browser-based versions of Word, Excel, PowerPoint and OneNote.

It seems Google is upping the ante in its war with Microsoft…

Google Microsoft spoof search results SERP joke

Google ups the ante

Surprised they never thought of it sooner to be honest.

Microsoft seem keen to embrace Web 2.0 and Service-Oriented Architecture (SOA), despite the fact it’s bungled opportunities for innovation in the past.

Microsoft have made a few statements recently that suggest SaaS and SOA are on its mind, whisperings like this abound and finally a couple of days ago Microsoft stopped being coy about its plans and made a statement.

With Microsoft wading in, does this mean we have to take cloud computing seriously?  I think it does.  What does this have to do with the inability to right-click in Microsoft’s development platform Silverlight?  Why do I randomly bring that one up?  We’ll discuss that later.

I’m going to take you back a few years to illustrate why Microsoft has hit the ball out of the park by taking cloud computing seriously.

Back in the day, most people thought Apple had a good thing going with its market-leading hardware and operating system:

Apple's model

Apple

If people wanted the Operating System, they had to buy into the Mac – and vice-versa.  What could possibly go wrong?  Well we all know what did go wrong for Apple:

Microsoft's model

Microsoft

By positioning itself primarily as an Operating System and Software manufacturer, Microsoft pulled off its now infamous coup de grace: allowing other vendors to supply the hardware increased competition and drove down the price of the hardware.  If you wanted a cheap computer, you didn’t buy an Apple.  So you ended up tied to Microsoft’s operating system and got sold its software, which rapidly became ubiquitous.  Microsoft leap-frogged Apple, positioned itself higher up the food chain and strangled Apple in the process.

Microsoft have had that smug grin on their face ever since.  The one company that’s made that smile waver is Google:

Google's model

Google

The Internet was another rung on the ladder – Microsoft anticipated it but despite successes with their Internet Explorer browser failed to capture the hearts of Internet users after Google scored a sneaky goal by dominating the search market.  There’s enough room in the system for Apple to have a place on the bottom, and there’s more than enough for Microsoft higher up, but Google had now decisively leapfrogged Microsoft.  Despite still wearing that smug grin, Microsoft has been irritated at Google’s share of the expanding market; it does not want to be left behind.  Which is why this has made them a bit happier:

Google's market

Google

It’s made them happier because it hasn’t really worked.  Google have tried to extend their presence into more cloud computing services and they’ve pretty much failed.  Sure, web-based mail has been succesful, but everyone’s got a piece of that and it’s more of a utility than a way of life; a few scattered tools on the web hardly look to challenge Microsoft’s domination of the operating system and software market and neither do they look like much of a missed opportunity (yet).

The whole point of having a platform is that you can use it to roll out your real money-spinners.  Apple used their Mac platform to roll out their OS.  Microsoft used their OS to roll out their software.  Google has dominated the Internet platform with its search engine, but the nature of the technology means that Google can’t use it to sell people anything else.  It earns vast revenue itself through advertising, sure, but Google wants more.  And why not?  It would be the equivalent of Microsoft saying: “Sure, we’ve built Windows, and that makes enough money – let’s not bother trying to sell people Word.”

This is why Google took the natural step and tried selling people on Google apps.  But the problem is that their tools are treated more like fanciful games by most Internet users, not the integral way of life that software like the Office suite has become.  So where does the problem lie?  The problem is with the Internet; it’s too big, Internet users aren’t loyal and they surf about like gadflies.  Google might control it but it’s not really a platform for rolling out web services; it’s too diaphanous.  There is a solution, but it’s difficult to grasp it.  This is the model that had slowly been appearing in the minds of Microsoft and Google:

The Future?

The Future?

(Of course I have over-simplified here: cloud computing will not kill traditional software and Operating Systems, but I believe it will reduce their share of the market considerably.)

Just like the Windows operating system crystallised a bunch of messy code in the minds of users with a user interface that then made software accessible, so a web-based OS should organise the mess of the web into something manageable for the average user.  And it will be a real platform for rolling out web services.

Of course, we’re talking about a conceptual operating system here: users will still need something to boot up their PC!  The way we’re moving, however, it looks like the user-interface and backbone that drives the software will be web-based.  It makes sense.

Isn’t that just an internet browser?  Well, not really.  Google’s Chrome seems developed with web services in mind, with all its accoutrements and javascript powerhouse, but it’s not exactly revolutionary, and neither is it an operating system to drive SaaS applications.

Microsoft are going to try and do to themselves what they did to Apple: leapfrog the market, leave the market free beneath them and thus open up competition below to channel more consumers up the funnel towards their new base.

Something that tells me very strongly that they have this in mind?  The inability to right-click in Silverlight!  If Microsoft are so keen to be a part of Cloud Computing, why have they irritated every programmer in the land by making right-clicks ineffective? (The developers at The Web Service are not happy.  Typical quote:

Why have they disabled right click when Mac users make up 5% of the computing population and only 5% of those have a one-button mouse?  You might as well deliver software to everyone as a book because not everyone has a computer!

Well, it might seem a bit bizarre at first, but this is what I reckon:

Microsoft want to make their cloud computing platform and software as accessible to as many Internet users as is humanly possible, even if that means limiting the applications.

Why?  Simple: They plan on leap-frogging once again, this time into the cloud, and they know they will leave behind their earth-based operating system.  Like they did before, they will move up a level, make a cloud-based operating system that is accessible to all, and will gain mass adoption.   People will abandon Windows XP, Vista and whatever earth-bound incarnation of Windows 7 is around.  They’ll most probably use Linux instead (it will be one hell of a lot cheaper); all the stuff they’ll be interested in, the UI, cuddly bits and what makes their web-based software work will be fed to them through the cloud.

Microsoft knows they’re having to move house and wants to be sure of capturing the new market further up the ladder before the old one decays and withers away.  So they’re trying to do what they did with Windows and make their first steps into a cloud-based OS ubiquitous by letting as many people as possible hook into it.  Then, once more, they’ll be unmoveable.

Maybe that’s too much to read into from one functionality problem with Silverlight, but this sort of thing never stopped Columbo.

Does Microsoft know what it’s doing with Service Oriented Architecture (SOA)?  Despite some half-hearted moves, it has seemed very reluctant to embrace Software as a Service (SaaS) and SOA.

According to Jason Hiner:

It’s easy to forget that when Microsoft launched Windows XP it was actually trying to change its OS business model to move away from shrink-wrapped software and convert customers to software subscribers. That’s why it abandoned the naming convention of Windows 95, Windows 98, and Windows 2000, and instead chose Windows XP.

The XP stood for “experience” and was part of Microsoft’s .NET Web services strategy at the time. The master plan was to get users and businesses to pay a yearly subscription fee for the Windows experience — XP would essentially be the on-going product name but would include all software upgrades and updates, as long as you paid for your subscription. Of course, it would disable Windows on your PC if you didn’t pay. That’s why product activation was coupled with Windows XP.

Microsoft released Windows XP and Office XP simultaneously in 2001 and both included product activation and the plan to eventually migrate to subscription products. However, by the end of 2001 Microsoft had already abandoned the subscription concept with Office, and quickly returned to the shrink-wrapped business model and the old product development model with both products.

The idea of doing incremental releases and upgrades of its software — rather than a major shrink-wrapped release every 3-5 years — was a good concept. Microsoft just couldn’t figure out how to make the business model work, but instead of figuring out how to get it right, it took the easy route and went back to an old model that was simply not very well suited to the economic and technical realities of today’s IT world.

Blinkered

Blinkered

Despite the fact that they’ve no problem with shoving any manner of horror down our throats (User Account Control, anyone?) Microsoft has shied away from taking the lead in SOA and instead shuffled backwards after it attempted to prime the market with XP; it’s taken what it must have considered to be the “soft option”.

They’ve forgotten how to be innovative. And worse, Vista is a reaction to perceptions that were outdated before it was even released.

Vista is vulnerable and Google have sensed it – this has to be the reason why they’re pushed out Chrome onto the market.  The real idea behind it is this: when web services are adopted by the mainstream they will be able to use Chrome essentially as a web-based operating system within an operating system.  If we are looking for the perfect way to introduce a more service-based architecture, browsers are the key:

1) They’re familiar to the user;

2) They can be used as an Operating System as a Service painlessly, with users paying for the service on a rolling basis through advertising.  In this respect Google are the only players who’ve really nailed user-friendly advertising, with their low-key targeted ads.

As the ubiquitous operating system and browser provider, Microsoft had the chance to implement real change and blew it twice – once with Vista and again with IE7.  Changing the OS may have been a little bit of a gamble, but just like the dead Vista has proved, people would have been happy to “upgrade” to XP… Vista is a lame duck and represents a gamble that Microsoft bottled out of.  The horribly innacurately named Vista (I think “Blinkered” is more fitting) should have been the next stage of SaaS, aimed squarely at enterprise, while XP was still relatively new.

SOA is a destructive technology and Microsoft needs to take a pre-emptive strike.  Unfortunately, it won’t have the luxury of buying up upstart competitors because… well, because the main upstart seems to be Google, who are not so small and won’t sell.